FAS of Russia protected auto dealers against unfair actions of auto manufacturers and distributors

Recently, the FAS of Russia’s priority has been to create a competitive environment on the Russian auto market.
The antitrust authority has repeatedly brought to notice the unfair actions of auto distributors in regard to dealer networks, including unreasonable termination of dealer agreements.

For purposes of developing competition and ensuring fair practices by the auto market participants in the Russian Federation, on September 7, 2012 the FAS of Russia drafted the following Recommendations for auto manufacturers and distributors:

1. Dealer agreements should be entered into for at least 5 years or, as regards official dealers which made significant investments into developing the dealer business subject to the long payback period, for an indefinite period.

2. Termination of dealer agreements must be justified in detail by the initiating party.

3. No actions should be taken which lead to establishing an official dealer’s resale price for auto products, other than establishing a maximum resale price.

4. Discriminatory conditions cannot be created for certain dealers within one dealer network (short delivery of cars, delivery of non-liquid models only, unilateral amendments of delivery terms, request for additional investments into equipment or premises, request for 100% advance payment for products, etc.).

5. Groundless denials to independent auto service centers in supplying original parts, accessories and consumables, as well as in granting the right to access information databases (e-catalogs of spare parts, consumables and accessories) enabling to provide quality repair and maintenance of cars should not be allowed; discriminatory selling price for original parts, accessories and consumables, as well as for the right to access information databases should not be established, except in cases when there are economic grounds for establishing different prices.

6. Interfering with arrangement of service centers at the manufacturer’s standards without selling cars, as well as arrangement of selling cars at the manufacturer’s standards without constructing a service center (splitting sale and servicing) are not allowed.

7. A document should be elaborated which would regulate interaction with potential contractors and establish, inter alia, requirements toward potential contractors, a procedure for contractors submitting documents, procedures and timeframes for adopting decisions to enter into or refuse from entering into dealer agreements.

Although the document serves as a set of recommendations, under certain circumstances failure to comply with these provisions, including absence of the document specified in Item 7 of the Recommendations will likely be deemed by the antitrust authority to be a violation of the antitrust law.

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Irina Akimova or Julia Borisova, Moscow Office of Capital Legal Services.

This information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.